Gear4music on song for Europe’s £4.3bn musical instruments market

Andrew Wass, founder and chief executive of Gear4music
Andrew Wass, founder and chief executive of Gear4music
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ONLINE RETAILER Gear4music is tuning up for Europe’s £4.3bn musical instruments market after confirming plans to float on the junior stock exchange.

The York-based company hopes to raise £8m via a sales of shares on Aim that will value it at £25m. “This is completely about growth,” Andrew Wass, the chief executive and founder told The Yorkshire Post.

Gear4music is one of the region’s fastest-growing retailers with sales nearly doubling over the last two years to more than £24m.

The directors believe the business is well positioned to take advantage of a fragmented UK market and the ongoing shift from high street to online retail across Europe.

The Yorkshire Post caught up with Mr Wass in between investor presentations in the City today. He said: “It’s fantastic. I’m loving the roadshow and the whole experience.”

Mr Wass, a keen pianist, founded the business in 1995 to sell IT systems for the audio recording market and launched Gear4music in 2003. Revenues have increased every year since then, with 37 per cent like for like sales growth in the year ending February 2015.

The 44-year-old entrepreneur said: “Your ambition changes as you go along this journey. Who knows what is possible next?”

Key Capital Partners took a minority stake in Gear4music in 2012 with a £3.4m investment, helping to fund development of the company’s ecommerce platform and its advance into Europe.

The platform supports 19 websites in 15 languages and eight currencies and has the capacity to expand into new markets and handle increased volumes of sales and traffic.

The group sells more than 27,000 different products from more than 550 brands including Fender, Yahama and Gibson and more than 1,400 own-label goods.

It operates from a 135,000 sq ft office, showroom and distribution centre on the outskirts of York. It has 110 employees and adds up to 50 more during the Christmas run-in.

Mr Wass said Gear4music is more specialist than US giant Amazon, dubbed “the everything store”, and competes primarily against high street chains in the UK and German rivals in mainland Europe.

He added: “The way that people buy has changed a bit. People want the convenience of buying online. When you get something from us you can try it out. If you are not totally happy you can send it back. There are pretty good upsides to buying online.

“We do a huge range of stuff. You can generally find what you want to buy from us, from strange instruments to mainstream items like drumkits and guitars.”

He said the business would continue to be based out of York and described the city as “a great place to recruit”.

He plans to use the proceeds of the float to further develop the ecommerce platform, invest in marketing, extend the range of products held on stock, pay down debt and open a flagship store in London to raise awareness of the Gear4music brand and allow more hands-on access to products.

Mr Wass said he will remain the largest shareholder “by quite some way” although the next few days will determine the precise details.

Gear4music has appointed City veteran Eric Ford as chairman, a former chief executive of merchant bank Teather & Greenwood and a past chairman of the Quoted Companies Alliance.

The UK market for musical instruments and music equipment is worth £750m and is highly fragmented with no dominant retailer and the top six players accounting for just 16 per cent of the sector.

Europe presents an even bigger opportunity; company directors believe the top 10 European retail markets generated combined sales of £4.3bn in 2012. Germany is the largest market followed by France, the UK and Italy.

Richard Naish, a partner at Walker Morris, provided the legal advice to Gear4music.

He said: “The IPO is a positive move and will provide a solid platform for future growth for this successful Yorkshire-based business.

“We’ve had the pleasure of working with the company for a number of years, having previously advised at the time of Key Capital Partners’ investment in 2012, making it particularly satisfying that we have been able to help with the transition from a private equity backed business to one that will be publicly quoted.”